CEOs Twist Employees’ Arms over Politics

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Just what the hell is going on?

You may have heard that it’s unwise to discuss sex, religion, or politics in public with anyone other than close friends. If anything, those topics should be avoided even more carefully at work, where strong emotions can interfere with productivity.

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Apparently, the chief executive officers of three companies either never heard that advice or decided to ignore it.

At Westgate Resorts, a large, privately held real estate and time-share company, CEO David Siegel told employees in an October 8 memo that they should vote for Mitt Romney in next month’s Presidential election. If President Obama were reelected, Siegel wrote, the company might lay off workers or shut down completely.

Richard Lacks, the top officer at automobile-parts supplier Lacks Enterprises, also advised employees in a memo last week to vote for Romney. He said an Obama victory would force the company to deduct more from their paychecks to pay for health benefits.

Taking the cake, though, was Robert Murray, CEO of coal company Murray Energy and an ardent financial supporter of Romney and the Republican Party. The candidate held a campaign event in August at a mine in Beallsville, Ohio. Murray instructed company managers to tell their staff to skip work for a day to attend the event in a show of support for Romney, who stated during last week’s Presidential debate that he’s a coal-industry fan. What’s more, the company’s hourly workers were not paid for the day and were given a choice of making up the hours on nights or weekends or losing the pay altogether.

Murray Energy did not respond to CFO’s requests for comment. But in an interview with radio station WWVA, the company’s CFO, Rob Moore, may have set a new standard for walking on both sides of a fence. “Our managers communicated to our workforce that the attendance at the Romney event was mandatory, but no one was forced to attend. . . . We had people who did not show up that day and there were no repercussions or consequences taken against any of them,” Moore said.

The host of the radio program, David Blomquist, said a group of Murray Energy employees told him anonymously that they felt intimidated into attending and were outraged at being forced to, in effect, put in a day’s work without getting paid. When Blomquist asked Moore whether that was fair to employees, the CFO said, “As a private employer, we made the decision not to pay people for the day.” Moore also pointed out that it’s not unusual in the mining industry for shifts to be canceled because of equipment failures or other safety reasons, so hourly employees are accustomed to occasionally losing a shift’s worth of pay.

Margaret Paget, co-chair of the employment practice at law firm Sherin and Lodgen, who typically represents companies and not employees, offers that “at the risk of stating the too-obvious, one can’t fairly compare a cancelled shift to forced attendance at a political rally. Only the latter requires workers to use their nonworking, uncompensated time for the employer’s benefit.”

But Moore said that attending pro-coal events like the one Romney held was “in the best interest of anyone that’s related to the coal industry. When you think of how critical this election is [and] that we get someone into office who supports coal, to give up eight hours for a career — I just don’t believe there is anything negative about that.”

Long Arm of the Law
Now the company may be in legal hot water. The federal Fair Labor Standards Act (FLSA) provides that employers must compensate nonexempt (hourly) employees for working time. An employee’s attendance at lectures, meetings, training programs, and similar activities is considered compensable working time unless four criteria are met: attendance is outside of the employee’s regular working hours, attendance is in fact voluntary, the event is not directly related to the employee’s job, and the employee does not perform any productive work during such attendance.

Depending on specific facts, Murray Energy may or may not be off the hook for an FLSA violation, notes Paget. “Assuming that attendance at a political rally might be considered a lecture or meeting within the meaning of the FLSA, which I think is a reasonable and fair interpretation, a violation could have occurred,” she says. “For example, there could have been employees in attendance who don’t typically work the shift hours during which the campaign event was held. Also, given Moore’s comments, it’s not perfectly clear whether attendance was in fact voluntary.”

She adds, “There are big potential FLSA problems in this approach. It’s awful. I would think that any attorney advising that company would have said, ‘Red flag! You’re going to trigger the FLSA in some way by doing this.’ ”

Robert Ottinger, a New York attorney whose eponymous firm represents employees in labor disputes, says Murray Energy employees could bring a class-action suit to recover their pay and their costs incurred in doing so, and they may be entitled to penalties as well.

But Murray Energy’s political communications with employees are hardly limited to that one Romney campaign event. Moore acknowledged on the radio that each month, workers are notified of the political causes and upcoming events that Robert Murray is supporting and are given an opportunity to participate or donate. Also, he said, the company encourages its 354 “executive employees” as defined by the Federal Election Commission (FEC) to contribute 1% of their salary to political causes through a payroll deduction, as permitted by FEC regulations. Moore said in August that 151 such employees were participating.

An October 4 article in The New Republic described CEO Robert Murray as “one of the most important GOP players in one of the most important battleground states in the country.” Company employees have given the Romney campaign more than $120,000, according to the article. That and several other published reports anonymously quote employees as saying they feel continually coerced to donate time and money.

Appended to the article were several examples of correspondence from Murray to company managers with language like “have your salaried employees make their contribution as soon as possible. Please see that they ‘step up,’ for their own sakes and those of their employees.”

On October 8, Chris Redfern, chairman of the Ohio Democratic Party, cited the article in a letter to the Justice Department requesting a criminal investigation of Murray Energy and its management. Redfern suggested that the company’s solicitations of funds for political causes may have “involved extortion, money laundering, racketeering, and other violations of Title 18 of the U.S. criminal code.”

With regard to compelling attendance at a political event, though, Paget points to commentary about the Supreme Court’s landmark decision in the 2010 lawsuit against the FEC by the conservative activist group Citizens United. In its ruling, the high court held that the First Amendment prohibited the government from restricting political contributions by corporations and unions.

The ruling, suggested an essay in The Yale Law Journal, also could permit employers to compel workers, on pain of termination, to attend meetings where company political viewpoints are aired. The essay cited this passage from the decision, written by Justice Anthony Kennedy: “The Government may not suppress political speech on the basis of the speaker’s corporate identity. No sufficient governmental interest justifies” such a limitation.

Here’s Who to Vote For
Under Section 594 of Title 18, someone who intimidates, threatens, or coerces another person so as to interfere with that person’s right to vote for whomever he or she chooses is subject to fines and up to a year in prison.

Not only Robert Murray but also the CEOs of Westgate Resorts and Lacks Enterprises may have violated the spirit of that statute, if not its letter, in their memos to employees.

Westgate’s David Siegel, who with his wife was the subject of this year’s documentary “The Queen of Versailles” about their quest to built the largest residential house in the United States, stressed to employees that they should vote for “whomever you think will serve your interests best.” But he also said that another four years of Obama as President threatens their jobs.

“If any new taxes are levied on me or my company, as our current President plans, I will have no choice but to reduce the size of the company,” he wrote. “You see, I can no longer support a system that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and so will your opportunities. If that happens, you can find me in the Caribbean sitting on the beach, under a palm tree, retired, and with no employees to worry about.”

Siegel also made what must be considered a quite odd bid for his employees’ sympathy for him personally. “Sure, you may have heard about the big home that I’m building. I’m sure many people think I have a very privileged life,” he wrote. “However, what you don’t see or hear is the true story behind any success I may have achieved.” He then described at length his allegedly humble beginnings and years of forgoing material and leisure pleasures in order to build the company where his employees work, while his friends squandered their money on partying and “spent every dime they earned.”

“Even to this day,” Siegel went on, “every dime I earn goes back into this company. Over the past four years I have had to stop building my dream house, cut back on all of my expenses, and take my kids out of private schools simply to keep this company strong and to keep you employed. . . . Most of you arrive in the morning and leave that afternoon and the rest of your time is yours to do as you please. But not me. . . . I eat, live, and breathe this company every minute of the day, every day of the week. There is no rest. There is no weekend. There is no happy hour.” Somewhere, violins were singing.

In “The Queen of Versailles,” Siegel claimed he was personally responsible for George W. Bush’s victory over Al Gore in the 2000 Presidential election. In an August 3 Bloomberg BusinessWeek article, writer Susan Barfield wrote that Siegel told her, “I had my managers do a survey on [all 8,000 Westgate employees]. If they liked Bush, we made them register to vote. But not if they liked Gore. On Election Day, we made sure everyone who was voting for Bush got to the polls. I didn’t know he would win by 527 votes [in Florida]. Afterward, we did a survey among the employees to find out who voted, who wouldn’t have otherwise. One thousand of them said so.”

All of that makes the memo from Richard Lacks to his employees at Lacks Enterprises sound pretty tame. As reported by MLive.com, a website devoted to Michigan news, the CEO wrote that if Obamacare stays in place, the company’s health-insurance costs will go up by an additional 2% per year. “You will receive no direct benefit other than you will have to pay for it. It is important that in November you vote to improve your standard of living,” he reportedly wrote. Lacks, like Westgate and Murray Energy, declined or did not respond to CFO’s requests for comment.

Ottinger notes that aside from any applicable federal laws, attempting to coerce employees to vote for a candidate is specifically illegal in California and perhaps other states. There’s also a statute prohibiting such activity in Broward County, Florida, where Westgate operates two resorts.

Legalities aside, “These CEOs obviously have little respect for their employees and an inflated sense of their own importance,” Ottinger says. “Employing people does not mean you can tell them how to live their lives outside work.”